The Quoted Companies Alliance supported MM&K’s survey and encouraged Chairmen and Non-Executive Directors to complete the questionnaire. All survey participants received a free copy of the report (normal price £200 +). MM&K polled the views of 488 directors – 298 Chairmen and 190 Non-Executive Directors (NEDs) covering 1,300 Board appointments; making it by far the most authoritative survey of its kind.
80% of Chairmen and Non-Executive Directors had their remuneration frozen last year.
78% do not expect a fee increase this year.
These are the key results of MM&K’s 2012 survey of Chairmen and NED's on fees and time spent, plus their views on risk and other key Boardroom issues. The survey also polled views of Chairmen and NEDs about executive directors’ remuneration.
The new Quoted Companies Alliance Remuneration Committee Guide for Smaller Quoted Companies (February 2012) stresses the importance of share ownership (the UK Corporate Governance Code and ABI Remuneration guidelines barely mention share ownership. This is one of the areas where the Quoted Companies Alliance's guide is much better than other guides and much more fit for purpose for smaller quoted companies.
It is therefore reassuring that there is strong support from Chairmen and NEDs for the new Quoted Companies Alliance remuneration guidelines for share ownership by executives:
• 81% agree that ownership of significant amounts of shares improves the alignment of executive directors with shareholders.
• 93% agree that long term share ownership should be encouraged.
• 93% agree that the deferment of part of bonus into shares is a good idea.
• There is also quite strong agreement that there should be a formal policy restricting the sale of shares, although there is a significant minority who disagreed with this.
MM&K think that the standard executive remuneration model is too short term, not enough equity based pay and too often has poor linkage of pay and performance. So to test this view, the survey asked respondents whether the existing remuneration model is broken. Quite a lot– about half think that the model is broken. But a substantial part think it is OK - 30%. The other 19% either don't know or were neutral about the issue. The results are very interesting because there is a bimodal distribution. Getting consensus to change remuneration will not be easy.
+You can buy the survey (£200) by contacting Cliff Weight at MM&K on 020 7283 7200. If you are reviewing fees for your NEDs or Chairman it is essential reading.
Cliff Weight, the author of this article, is a member of the QCA Corporate Governance Committee and director of remuneration consultants MM&K. MM&K worked with Hanson Green and Directorbank, the leading firms for recruiting Non-Executive Directors, to produce the survey. MM&K Limited is authorised and regulated by the Financial Services Authority.